Mike Pastore, a friend of mine, writes about personal finance and accumulating wealth at Mike’s Millions. Financial Nut is privileged to have him write today’s article. For more information about Mike, visit his About Mike page and be sure to subscribe to his RSS feed. Thanks, Mike!

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Not rolling over your 401(K) when you leave a job is a big mistake. If you need to place your money in a more lucrative investment, you will not be able to do so if you leave your money in your old employerâ€™s 401(K). This is money you have placed into this fund over the years and it belongs to you. You need to ask yourself important financial questions when it comes to your investments.

Once you invest money into the 401(K), the employer dictates what kinds of investments your money is put into. Moving your money upon leaving gives you the opportunity to decide what types of investments you want to place your money into. When money is invested with a company, it is important for a company to invest your money to make sure the company benefits; your benefiting may be secondary.

The economy has taken a treacherous turn and it is not guaranteed your money is placed in the best places for growth. If you roll your money over you have a chance to place your money in a situation where you have more control. Leaving an employer you may have needed to draw money off of your 401(K) or you may have money coming into this account and you want all of this money accounted for before you make a 401 (K) rollover. You do not want to incur any taxes or penalties which can prove to be very expensive.

A rollover is by far the easiest way to place yourself in a position to get into an investment situation you might normally not have the money for. You will not have to pay any outside expenditures, all you will need to do is fill out the proper paperwork and have your money transferred.

Once you take the steps to fill out the paperwork and the money has been mailed to you be sure you go ahead and get your account funded. You do not want the government deciding you are keeping the money and taking penalty action which can take quite a bite out of your wallet. If you fund your account within 60 days this money can be reclaimed but it is a tedious process and you will have lost the earnings on the funds.

It is wise to do a direct rollover and to place your 401(K) in a separate IRA this way your 401 (K) will not become tainted by taxed money. The money will still be in a tax deferred account and you can decide what fund you want to invest in without losing a large portion of your investment to penalties.

In these economic times it is extremely important to keep a close watch on your finances. With the rate of layoffs and people being terminated from their place of employment it is important to understand the options you have for taking care of your 401(K). It is indeed your money, but you will need to follow up to make sure your money is place where you want it to be. The procedure can be held up by a glitch in the paperwork, staying informed of the final outcome is very important to your financial health.

Thank you Aman@BullsBattleBears. I’m very glad that you enjoyed the post. I’ve known people personally that would leave their job and not roll over their 401K into an IRA once they were gone. Instead they would just cash it out and take the tax hit. I always thought that was just crazy to pay uncle Sam with their nestegg. Talk to you soon.